Hiring overseas contractors — do I need to withhold taxes or file anything?

US C-corp hiring developers in Poland and Philippines as contractors. Do I need to withhold taxes? File 1099s? What paperwork is required on my end?

For foreign contractors (non-US persons, working outside the US):

No 1099 required: 1099-NEC is only for US persons or services performed in the US.

No withholding required: 30% withholding only applies to US-source income. Services performed entirely outside US = foreign-source income = no withholding.

What you DO need: Collect W-8BEN from each contractor. This documents they're foreign and not subject to US tax withholding. Keep on file for at least 4 years.

Important: If they ever work in the US (even briefly), the analysis changes.

Practical setup: Use Deel, Remote, or Oyster for international contractors. They handle contracts, payments, compliance for ~$30-50/contractor/month. Worth it to avoid the headaches.

Also get a proper contractor agreement with IP assignment, confidentiality, and independent contractor language. Misclassification risk exists in their countries too.

One thing to watch: "permanent establishment" risk. If your contractors in Poland start looking like a Polish branch (dedicated office, signing contracts, etc.), Poland may claim your company has tax nexus there.

For individual contractors working remotely: usually fine. For a team of 10+ in one country acting like an office: talk to an international tax advisor.

Super helpful thread. Just hired my first contractor in Argentina and was stressing about the tax implications. The W-8BEN tip saved me hours of googling.

Quick follow up - does anyone know if theres a difference between hiring through Deel vs paying them directly via Wise? Deel is charging us $49/month per contractor which adds up fast when you have 5 people.

@StartupMike_NYC - From a tax perspective theres no difference. Deel/Remote/Oyster are mainly for compliance convenience and contract management. If you're comfortable managing the W-8BENs and contractor agreements yourself, paying directly via Wise is fine.

The risk with DIY is misclassification issues in THEIR country (not the US). If Argentina labor authorities decide your contractor is really an employee, you could face problems. The EOR platforms handle that liability for you. Depends on your risk tolerance tbh.

I'll push back on the consensus here a bit. Everyone says "no withholding required" for foreign contractors but I've seen this bite companies during audits. The IRS expects you to have proper documentation (W-8BEN) BEFORE you pay. If you can't produce valid W-8BENs on audit, you could be liable for backup withholding you should have done.

Make sure you're actually collecting and storing these forms properly. Don't just assume no 1099 = no paperwork.